Summary:
- US stock markets to open lower
- US30 closed lower yesterday ending run of 10 consecutive higher closes
- Seasonality suggest potential for some weakness
US stock futures are pointing to an unusual phenomenon of late at 2:30 this afternoon – a red open. Equities across the Atlantic have enjoyed an incredible run higher of late with the US30 leading the charge in making 10 consecutive higher closes. This run was broken on Tuesday however, and with an inverted candlestick being printed there is at least a point of reference for some possible resistance at 22130.
Given the rally seen since April there is still plenty of downside possible to fulfill even the smallest definition of a pullback according to popular Fibonacci retracements. 23.6% is the first level that is commonly used for a retracement and this currently comes in at 21702. There was little by the way of resistance here during the move higher and you have to look towards the 38.2% point at 21437 to find anything resembling a swing level. A break above 22130 would change the outlook and require the redrawing of the Fibonacci overlay.
The US30 has rallied just under 9% since April but yesterday printed a possible reversal signal. Source: xStation
The summer months are often seen as quiet for stock markets as many participants take holidays creating the idea of a summer lull. However, looking back over the past 30 years August-September performance has been the worst for two consecutive months out of the whole year for the major US stock indices (DJIA, S&P500 and Nasdaq which are the US30, US500 and US100 respectively on xStation).
There has been a clear seasonal weakness in the months of August and September for US stock markets over the past 30 years. Source: StockTradersAlmanac.com